In “Le Bilan Luxe de l’année” (The Luxury Year in Review) interview series, Erwan Rambourg, the author of two books on the luxury sector and a specialist in consumer goods and retail, discusses the key developments that have shaped the luxury industry in 2021. Despite initial skepticism about the industry’s growth potential in the post-COVID era, Rambourg reveals that the luxury sector has exceeded all expectations. The substantial wealth creation, thriving stock markets, and reduced expenses on travel and dining out have contributed to strong sales in the industry.
However, Rambourg emphasizes that the most significant impact of 2021 lies in the transformation of luxury business models. The pandemic has forced luxury brands to adapt and make progress in serving local customers. Flagship stores in major cities have improved their ability to address the needs of Italian, French, and other European clientele. Additionally, online sales have accelerated, leading to better quality websites and services. Brands have also pivoted towards company-owned stores, allowing for better control over pricing and brand representation. These transformations ultimately benefit consumers and mark a shift towards a more professionalized industry.
When discussing the winners and losers of the luxury industry in 2021, Rambourg highlights the local clientele as the clear winners in terms of luxury consumption. With Asian tourism significantly impacted, European and American customers have played a crucial role in driving luxury sales. Moreover, established luxury brands like Louis Vuitton, Dior, Cartier, and Rolex have emerged as winners, leveraging their strong brand recognition and attracting first-time luxury consumers. Conversely, smaller brands have faced challenges in rebounding and gaining market share.
Rambourg also explores the evolving definition of luxury in 2021. While luxury was previously associated with American brands like Tommy Hilfiger and Ralph Lauren, consumer standards have converged globally. In the United States, the guilt associated with luxury consumption has diminished, and luxury is no longer seen as inappropriate or vulgar. In Europe, luxury brands have prioritized building more intimate and personalized relationships with consumers. In Asian markets, luxury continues to be a symbol of success and personal prosperity, while Japan stands out with its transgenerational approach to luxury.
Looking ahead to 2022, Rambourg predicts two major trends in the luxury industry. Firstly, luxury consumption is expected to remain primarily local, with Asian customers unlikely to resume international travel anytime soon. Secondly, consolidation among luxury brands and conglomerates will continue, with widespread acquisitions likely to shape the market.
Regarding the ongoing luxury war between Cartier and Tiffany & Co., Rambourg believes that there is room for both brands to thrive. Cartier benefits from its leading position, institutional reputation, and diversified product categories. Tiffany, with its new management team and support from LVMH, has the potential for rapid growth. Rambourg predicts strong growth for both players in the jewelry market.
Lastly, Rambourg discusses the role of luxury in the metaverse. He acknowledges that virtual products and services will become increasingly prevalent in the luxury industry. Luxury brands have already shown involvement in non-fungible tokens (NFTs) and the virtual world, indicating a growing interest in the metaverse.
Useful Links:
1. Luxury Society – https://www.luxurysociety.com/
2. The Business of Fashion – https://www.businessoffashion.com/
